Gloomy New Jobs Numbers; Obama Betting On Gay Marriage Boost; Homeless with a Job; Taxes Held for Ransom; Trees for the Shuttle

Aired September 7, 2012 - 17:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN HOST: And you're in the SITUATION ROOM. Happening now, the glow from the Democratic convention gives way to a bit of gloom. Disappointing jobs numbers shadow President Obama as he hits the campaign trail. And Mitt Romney is quick to take advantage.

Romney may have a new headache of his own. An anonymous group claims to have hacked into his tax returns. It's demanding a ransom. So, is it a heist or is it all a hoax?

And her fiery arm waving speech got the crowd going at the Democratic convention. Now, it's going viral. If you missed Jennifer Granholm, we're going to give you another chance.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in the SITUATION ROOM.

(BEGIN VIDEO CLIP)

(END VIDEO CLIP)

BLITZER: It didn't take President Obama long to get back on the campaign trail. Hours after leaving the fired up convention crowd in Charlotte, he began a campaign swing in New Hampshire. But President Obama's bringing some extra baggage with him, gloomy new job numbers that show the labor market slowing down sharply.

The economy adding just 96,000 jobs in August, down from a revised 141,000 in July. The unemployment rate did drop from 8.3 percent to 8.1 percent, but that's because hundreds of thousands of Americans stopped looking for work. Here's CNN's White House correspondent, Dan Lothian.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Wolf, joined by the first lady and the Bidens, President Obama tried to build a momentum from the Democratic National Convention. At his first stop here in Portsmouth (ph), the president made his pitch to the middle class, but also confronted the reality of a still struggling economy.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Even before he began drawing a contrast between his policies and the ideas of his Republican opponents, President Obama admitted there was no better person to make his case than former president, Bill Clinton. BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Somebody e-mailed me after his speech and said you need to appoint him secretary of explaining stuff.

(LAUGHTER)

OBAMA: That's pretty good. That's what this election's about.

LOTHIAN: Explaining is one thing. Turning the economy around is proving to be much more difficult. The August jobs report is another reminder. The White House insists the economy is healing, but slowly. And as the president reminded supporters in New Hampshire, adding instead of subtracting jobs.

OBAMA: Business once again added jobs for the 30th month in a row, a total of more than 4.6 million jobs.

(CHEERING AND APPLAUSE)

OBAMA: But that's not good enough. We know it's not good enough. We need to create more jobs faster.

LOTHIAN: But Republican opponent, Mitt Romney, says the president doesn't know what he is doing when it comes to jobs and the economy.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: After the party last night, the hangover today, the jobs numbers were very disappointing.

UNIDENTIFIED MALE: Mitt Romney!

(CHEERING AND APPLAUSE)

LOTHIAN: Both campaigns are offering different visions on how to fix the problem. And their messages are aimed at middle class voters, especially those in key battleground states. At his first post- convention rally, the president ticked through his accomplishments and offered a list for the future.

From boosting exports to investments in clean energy and education. And he blamed Congress for standing in the way of progress.

OBAMA: We could create a million new jobs right now if Congress would pass the jobs plan that I sent to them a year ago.

(CHEERING AND APPLAUSE)

LOTHIAN: For voters frustrated by the slow recovery and uncertain about the president's ability to fix the economy, Vice President Biden tried to sway them with an emotional appeal.

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: He has courage in his soul. He has compassion in his heart, and he has a spine of steel.

(END VIDEOTAPE)

LOTHIAN (on-camera): With both conventions over, the question is, has anything in this race changed? Senior White House advisor, David Plouffe, told reporters not to expect a significant post- convention bounce. He believes they have some momentum, but that the race will most likely remain where it was -- Wolf.

BLITZER: Let's take a closer look at both presidential candidates' strategies from now until November with the "New York Times" political correspondent, Jeff Zeleny, as well as "The New Yorker" magazine Washington correspondent and CNN contributor, Ryan Lizza. Ryan, were you surprised the president didn't offer more specific details on how to achieve those goals in his acceptance speech?

RYAN LIZZA, CNN CONTRIBUTOR: I was. I mean, he did offer more specificity than Romney's speech. But, the way he set up the speech, I think, that he deserved -- we deserved a little bit more detail.

Remember, he said at the beginning of his speech that this a very -- one of the most important election of our lives, and this is clear choice between these two competing visions about the role of government in society.

And in that clip that you played, Wolf, he talks about he's a president who tells you the truth. And I left the speech and I re- read it this morning a couple of times still wondering on some of the big issues that he's talked about a lot in the last few years, what he's going to do and whether he will pursue them if he's re-elected.

For instance, he mentioned climate change. But he didn't really tell us what he would do on that. We don't know on immigration reform. Is he going to pursue a comprehensive deal or not? And on the first and, you know, most fraud issue that he'll face, the fiscal cliff, we don't know exactly what his tax reform plan is.

We don't know what he would do on Medicare and Social Security and all those very complicated issues regarding getting a deal to deal with the long-term fiscal situation. So, I found the policy parts of the speech -- they seemed like they were wrong (ph) through the pollsters and the campaign strategists a few too many times. They seemed a little small bore to me.

BLITZER: Yes. And I found -- and let me bring Jeff into this conversation. You know, we heard, you know, Paul Ryan. We heard Joe Biden. We heard the president of the United States. They all went out of their way raising the whole Simpson-Bowles Commission recommendations, but guess what, they all rejected it when they had an opportunity to promote it. Were you surprised by that, Jeff?

JEFF ZELENY, NEW YORK TIMES POLITICAL CORRESPONDENT: It was a little surprised by that. And I agree with Ryan. I mean, there weren't a lot of specifics, especially because this campaign has been promising of it he would -- you know, their whole slogan is forward, and they were promising that he would give a window into the next four years. But, at the same time, it was not a state of, you know, the union address. It was an acceptance speech for the party's nomination. And, I guess, looking at what they were trying to achieve, simply overall was to ask voters for their patience, was to ask for a little more time to get things done. And he was talking to voters who already supported him once four years ago.

That's all he needs. I mean, he is not trying to necessarily persuade any new voters. He's trying to re-engage and re-energize some voters who may not be quite as sure of him this time. So, overall, I don't think it will go down as one of his best speeches.

But often speeches in the history of President Obama and even Senator Obama, sometimes, looked better farther down the road than they look in the moment of the speech. I think we've sort of glorified some of his speeches over the years in terms of being so spot-on in the moment. If he wins re-election to a second term in November, I think this speech will be remembered as being just fine.

BLITZER: I think everyone thinks President Clinton -- Ryan, President Clinton, by all accounts, gave a great speech. He certainly did a lot of help for President Obama. He's going out to campaign for him. He's going to raise money for him. How significant is President Clinton's role in trying to get President Obama's second term?

LIZZA: I think it's pretty important. I mean, you know, as the Obama campaign points out, there are only a couple national politicians who have approval ratings as high As President Clinton, basically, Clinton and Michelle Obama. You know, once you start getting in the mud of partisan politics, your approval ratings start to drop.

And Clinton's been a little out of the game for the last few years. He's seen as more of a senior statesman. And you know, there are plenty of Republicans that now have fonds (ph) -- look at him fondly. And I also think the fact that Obama and Clinton have this complicated history. They're not the best of friends.

I think it makes Clinton a more -- a better validater for Obama. When you watch them hug on stage the other night and you know the back story, you know that Bill Clinton didn't always like and respect this guy. It means a little bit more when he goes all out campaigning for him.

So, you know, some people in the campaign will call him their secret weapon. It sounds like he's going to be doing a lot more in the next few weeks.

BLITZER: Yes. You had a great piece in "The New Yorker" magazine on this relationship. Jeff, it was interesting, the morning after the Democratic convention, the Romney campaign releases ads in eight, eight battleground states. And I'll put the names up on the screen, Colorado, Florida, Iowa, Nevada, New Hampshire, North Carolina, Ohio, and Virginia.

I assume those are the key states, the battleground states that they think they have a good chance of winning. Missing from that list, Wisconsin, Paul Ryan's home state. Michigan, were you surprised, for example, Wisconsin and Michigan were not included?

ZELENY: Wolf, I was not surprised the Michigan was not included. I mean, Governor Romney -- I was just thinking back to a conversation I had with him a year ago. And I asked him if Michigan would sort of remain a sentimental favorite. And he said he would look at the map and see. So, I think that the Romney campaign knows that Michigan is a stretch.

Something would have to shift fairly fundamentally in this race with the economy, and perhaps, other things for Michigan to be in play. Wisconsin was a bit more of a surprise. Wisconsin is a much more of a classic battleground state, even though Democrats have won it in the last five presidential elections, it's still been very close in 2000 and 2004.

And Paul Ryan comes from a state that is more of a Democratic area. So, if he was to win over some of the Democrats in Janesville, in county (ph) where he's from, that could help the Republican ticket. But, the Romney campaign, I think, is going to wait and see what happens with some of the ads that some Republican Super PACs are placing in Wisconsin.

Seeing if it softens things up a little bit before they spend some of their own money there. North Carolina was also an interesting place. The Romney campaign clearly believes that they still have some work to do and that they have not closed the deal in this state, but you're right. These eight states are a road map.

And Bill Clinton is going to Ohio and Florida. So, they probably are not two more important states. And if you want a third, Virginia, those three states will be the top states.

BLITZER: Clinton could do great, I'm sure, for the president, especially in Florida. Jeff Zeleny, thanks very much. Ryan Lizza, thanks to you as well.

And don't forger, in our next hour, we're going to be hearing live from President Obama, Vice President Biden. They're together also with their wives at the University of Iowa in Iowa City. We're going to have live coverage of that event. That's coming up in our next hour.

There's one item in the Democratic Party platform that Republicans hope will derail President Obama's chances in November. That's just ahead.

(COMMERCIAL BREAK)

BLITZER: With both parties conventions now over, the two candidates didn't waste any time slamming the other's performance in dueling speeches delivered almost simultaneously. Watch this.

(BEGIN VIDEOTAPE) ROMNEY: I was surprised by his address because I expected him to confront the major challenge of the last four years, which is an economy which has not produced the jobs that the American people need. I expected him to talk about 23 million people or at least to talk about the unemployed in America.

I expected him to talk about the number of families having a hard time making ends meet. The number of middle income families who've seen the cost of health insurance go up, cost of food go up, cost of gasoline go up, even as their incomes have gone down. I expected him to talk about those things. But he did not.

Instead, it was a whole series of new promises, which he also won't be able to keep, because the policies he believes in and the direction he's pulling will not make America stronger. If President Obama were re-elected, we would have four more years of the last four years, and the American people are going to say no to that.

OBAMA: But our friends at the Republican convention, they've talked a lot about what they thought was wrong with America. They didn't tell you what was right.

(CHEERING AND APPLAUSE)

OBAMA: They didn't tell you what they'd do to make it right. They want your vote, but they don't want to show you their plan. And that's because they know their plan won't sell. That's because all they've got to offer is the same prescriptions that they've had for the last 30 years. Tax cuts, tax cuts, gut some regulations, oh, and more tax cuts.

Tax cuts when times are good, tax cuts when times are bad. Tax cuts to help you lose a few extra pounds. Tax cuts to improve your love life. It will cure anything according to them.

(END VIDEOTAPE)

BLITZER: President Obama and Vice President Biden expected to be speaking once again in our 6:00 p.m. eastern hour. When that happens, we'll bring it to you live at the University of Iowa.

Same sex marriage is once again an election issue, but this time, the Democratic Party and the president, they are coming down firmly on the side of extending marriage rights to gay couples. So, what impact will that have on the November election? Let's go to our White House correspondent, Brianna Keilar.

(BEGIN VIDEOTAPE)

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: At this convention, Democrats are wholeheartedly embracing same sex marriage in the very state that just passed a referendum banning same-sex marriage. Colorado's Jared Polis, the first openly gay person to be elected to a first term in Congress spoke Tuesday.

KEILAR: And just take a look at the entertainment lineup. Delta Ray wrote the anthem opposing the same sex marriage ban that passed here May 8th. It was one day later that President Obama changed his stance on the hot-button issue.

OBAMA: I've just concluded that, for me, personally, it is important for me to go ahead and affirm that I think same-sex couples should be able to get married.

KEILAR: Four years ago, when he was running for president, Obama held a different view.

UNIDENTIFIED MALE: Define marriage.

OBAMA: I believe that marriage is the union between a man and a woman.

KEILAR: The president's change of heart has energized young voters and his base.

CAMERON COCHRAN, NORTH CAROLINA RESIDENT: It absolutely makes me respect and support him ten times more. That's an issue for the bedroom. Not for our courts.

KEILAR: Six out of ten Americans have a family member or close friend who is gay. And most Americans now support same-sex marriage, but it's also a divisive issue that could cost the president some votes.

ALLISON NIETO, WASHINGTON RESIDENT: I voted for Obama. I haven't decided who I'm going to support for president this year. Marriage should definitely be between a man and a woman. And just say it that way.

KEILAR: Republicans are hoping ads like this one made by a conservative Super PAC and running this week in North Carolina will pull voters away from the president.

UNIDENTIFIED FEMALE: Obama is trying to force gay marriage on this country. That's not the change I voted for. Marriage is between a man and a woman.

UNIDENTIFIED MALE: That's not the change I voted for either.

UNIDENTIFIED FEMALE: What can we do?

UNIDENTIFIED MALE: We can vote for someone with values.

KEILAR: But the Obama campaign is betting he gains more votes and campaign donations than he loses over this issue. The day after her big speech, Michelle Obama touted what her husband has done for gay and lesbian voters.

MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: Whether it's passing hate crimes legislation or speaking out for the rights of all Americans to be able to do what Barack and I did and marry the loves of our lives.

KEILAR: Brianna Keilar, CNN, Charlotte.

(END VIDEOTAPE)

BLITZER: I want to note, gay marriage will be on the ballot in four states in November, Washington State, Minnesota, Maryland, and Maine.

A scathing statement in a five-day window for diplomats to leave. Canada, cutting ties with the country it considers the world's most significant security threat. Stay with us. You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Canada calls it quits with Iran. Lisa Sylvester's monitoring that and some of the other top stories in the SITUATION ROOM right now. Lisa, a lot of folks probably didn't even know Canada has diplomatic relations with Iran at least until now.

LISA SYLVESTER, CNN CORRESPONDENT: Yes. That is right, Wolf. You know, Canada is cutting diplomatic ties with Iran now. It's already shut down the Canadian diplomatic mission in Iran, and now, it has called its staff home. Today, Canada's foreign affairs minister ordered Iran's diplomats to get out of the country in the next five days.

And in a scathing statement, he blasted Iran over increasing concerns about its nuclear program, its anti-Semitic rhetoric, its human rights record, and its support of terror groups.

Four NFL players have been given the go ahead to play this weekend despite being suspended for their roles in the New Orleans Saints so-called bounty program. A league statement says NFL commissioner, Roger Goodell, will quickly determine what discipline to impose for violating the league's pay for performance rule. It says, until then, four players are reinstated and they may play.

And a prank has gotten a 26-year-old Philadelphia man in trouble with the feds. Kenneth W. Smith has been arrested and indicted for allegedly placing a bogus call yesterday threatening a U.S. Airways flight bound for Dallas. Today's federal indictment says Smith called police, and he told them that a passenger on that plane was carrying liquid explosives.

The plane was diverted and searched as was the pranked passenger and then sent on its way. If convicted, Smith could face ten years in prison.

And in Texas, you can put the pedal to the metal from Austin to San Antonio. The Texas Transportation Commission has approved an 85- mile-an-hour speed limit on a new toll road on a 41-mile stretch of state highway 130. It is expected to be the highest speed limit in the United States when it kicks in this fall. You won't even have to slow down to pay those tolls. Officials say they'll be collected electronically along the way. Imagine that. 85 miles an hour.

BLITZER: Yes. Have you ever driven on the autobahn in Germany, Lisa?

SYLVESTER: I haven't, but that's exactly as I read this story. that's exactly what I was thinking about, the autobahn.

BLITZER: Autobahn comes to Texas.

SYLVESTER: Yes.

BLITZER: All right. Thanks very much.

In this tough economy, even a full-time job is no guarantee of a roof over your head. We're going to meet a man who works all day, works very, very hard, only to sleep in a parking lot.

(COMMERCIAL BREAK)

BLITZER: Disappointing new employment numbers took some of the wind out of the Democrats' sails today. The economy added only 96,000 jobs in August. That was well below expectations. The unemployment rate dropped from 8.3 to 8.1 percent. That's because so many people stopped looking for work.

Let's go out front right now with CNN's Erin Burnett. Erin, how much pressure does all of this put on the Federal Reserve chairman, Ben Bernanke, to do something?

ERIN BURNETT, HOST OF CNN'S ERIN BURNETT OUTFRONT: It puts a lot of pressure on him. You know, Wolf, he was -- there's an annual symposium that he hosts in Jackson, Wyoming at the end of the summer. That was just last week. And he talked about the jobs market and the United States being a grave concern.

Now, for him that's a very, very strong adjective to use, to use the word grave, and that was before we got this number. And the number really is weak. And it shows that the economy just continues to sort of stumble along. When you look at 96,000 jobs, it wasn't just that.

The past two months, they weren't really great to begin with. They weren't terrible, but they weren't great. They got actually revised lower. So, not as many jobs created in June and July than we have thought then August was weak. And there was nothing was in there that looked good. You talk about people dropping out of the work force, well the number of hours people work, the wages they get per hour there was nothing in there that indicates any improvement. Now it was August, the end of the summer. But this is sort of a trend that we have started to see. So Ben Bernanke now is going to be -- the pressure will be to do another round of so-called quantitative easing. Easy money where the Fed tries to flood the system and the banks with money to try to get interest rates to go lower, whether he'll do that. But you know of course the challenge, Wolf, is that he has done this several times. He has not perhaps gotten the support that he would like from Congress or the White House. Both of them to blame for not passing more help out of Washington. But he's brought interest rates down. That's what he can do, right? They're already rock bottom. And we're still dragging along. So he can keep flooding the system with money, but every time you flood it, you got to wonder if it's a lot less effective than the last. And in fact that's what we've seen the past few times.

BLITZER: Well that raises a question, would any specific Fed action really make a difference let's say between now and election day?

BURNETT: That's the hard thing, Wolf. I mean one thing that it probably would do -- and that's why you didn't see the market drop a lot today, it didn't go up a lot, but it could make stocks go up. You know when you look at the big thing for the Obama administration that the stock market's up 65, 70 percent since he took office, that's an incredible number. It's the second best performance since Eisenhower.

And a big part of the reason for it is Ben Bernanke and easy money. So when Ben Bernanke throws that money at the system, the market goes up. That helps 50 percent of Americans, the wealthiest 50 percent, perhaps, but what about everybody else? And that's -- there's real question about the efficacy of what Ben Bernanke can do. So he can try, but without Washington helping, i.e. Congress, the president and fiscal policy, there's -- it's getting less effective every time.

BLITZER: Chances of Congress doing anything between now and the election zero.

BURNETT: Zero.

BLITZER: All right and you're absolutely right about the Dow Jones. It was about 7,000 when the president took office.

BURNETT: Yes.

BLITZER: It's over 13,000 right now. So if you've got a 401 or IRA you got investment in the stock market --

BURNETT: Right.

BLITZER: You've made money these past few years.

BURNETT: It's great -- and that is a lot of Americans. I mean this is no something to scoff at. But when you think about it, Wolf, usually the market goes up because it foresees an advance that the economy is getting better. That means companies will make more money. There'll be more hiring, but this time the market is the barometer that stands out as not going up for that reason. So, yes, it's good. But it's not sending the signal that it usually would, which would be good for everybody in the whole economy.

BLITZER: Erin knows the stuff. She's going to be OUTFRONT 7:00 p.m. Eastern later tonight. Loved working with you at the conventions, Erin. Thanks very much.

BURNETT: All right, you too, Wolf.

BLITZER: See you soon.

BURNETT: OK.

BLITZER: The number of Americans suffering in today's economy extends far beyond just those who are unemployed. For some having a job doesn't necessarily mean having a place to live. CNN's Kyung Lah joins us now with this part of the story -- Kyung.

KYUNG LAH, CNN CORRESPONDENT: Well Wolf, what all these job numbers don't show us is the reality for the middle class, the working middle class. We met a man who makes a decent middle class wage, but he's not living the sort of suburban life you might expect.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: How are you today? Hi.

LAH (voice-over): Julius Torrevillas is behind the wheel of a Santa Barbara MTD (ph) bus five days a week, a full-time job that pays $19 an hour to the jovial driver with the unforgettable beard. When his workday is over, he moves from his bus to another vehicle, his van, where he lives.

UNIDENTIFIED MALE: A regular full-size mattress.

LAH: This is home because he makes too much to qualify for public housing but can't afford rent in the high cost city of Santa Barbara.

(on camera): A lot of people think if you have a full-time job in America you're OK. That's not really the case for you, is it?

LAH (voice-over): Debt from a failed small business piled up and he and his wife are still digging out. So this county parking lot is where they sleep, joined by more than a dozen others who live in their cars. It's called the safe parking program, 114 spaces spread out across the county with a waiting list of more than 40.

UNIDENTIFIED FEMALE: I have senior citizens. I have couples. I have families.

LAH: A third of the people says the program's manager have jobs but are underemployed like approximately 17 percent of Americans.

(on camera): What do you think it says about America when somebody who has a job, who wants to work, still has to live in a car?

NANCY KAPP, NEW BEGINNINGS: I think people would be shocked. I think they would be shocked if they would come and meet some of these people because I'll tell you, when they come into my office, I want to cry because it reminds me of someone that could be my mother, my sister, my brother.

LAH: Or your bus driver.

UNIDENTIFIED MALE: Morning.

LAH: Who starts his day on the move.

(SOUNDS)

LAH: Breakfast with his wife, Mary, is at the donut shop.

UNIDENTIFIED MALE: Toothbrush, toothpaste.

LAH: The bathroom, a public one, the dressing room, the back of the van.

UNIDENTIFIED FEMALE: Normal life is what you miss. You know it's -- living in a van is not the norm.

LAH (on camera): Has the middle class in America changed?

UNIDENTIFIED MALE: I think the middle class has slid down the scale a little bit more towards the lower class and it's a little tougher for the middle class people to survive and to actually pursue (INAUDIBLE) dream.

UNIDENTIFIED MALE: I love you --

UNIDENTIFIED FEMALE: I love you too --

LAH (voice-over): Torrevillas keeps chasing his dream hoping whoever wins this election will be able to shift the economy into gear.

UNIDENTIFIED MALE: Good morning. Thank you.

(END VIDEOTAPE)

LAH: Torrevillas and his wife say that they've considered moving to a more affordable city, but he'd have to give up his full-time job. In this economy, Wolf, he's worried that there wouldn't be a job in a new city.

An anonymous group claims to have stolen Mitt Romney's tax returns and demands a ransom. But is it a heist or is it a hoax?

(COMMERCIAL BREAK) BLITZER: Mitt Romney has dismissed all the political demands to release more than two years of his tax returns. But now an anonymous group claims to have hacked into them and is alleging that it is holding them for ransom. Brian Todd has been looking into the story for us. What are you finding out, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, no indication that anyone is willing to pay a ransom right now and there are real questions over the legitimacy of this claim. Nonetheless this whole thing has drawn in the U.S. Secret Service and an investigation is underway.

TODD (voice-over): And he's released his tax records covering the past two years. Democrats have been clambering for more, but likely didn't expect they'd appear through a plot right out of "Ocean's 11".

UNIDENTIFIED MALE: You think he's going to fall for this?

UNIDENTIFIED MALE: You did.

TODD: There's a claim of a sophisticated heist of Mitt Romney's tax records. An anonymous letter posted online is boasting just that and includes an extortion attempt against Romney's accountant's PricewaterhouseCoopers. The letter says a team breached the firm's offices in Franklin, Tennessee on the night of August 25th. In some detail the posting says "The team gained access on the third floor via a gentleman working there." Then it says they moved to the second floor, set up shop in an empty office and quote "all available 1040 tax forms for Romney were copied."

UNIDENTIFIED MALE: And we're in.

TODD: Cue the ransom demand. The group purportedly behind the heist says it wants $1 million or it will de-encrypt Romney's tax records on September 28th.

(on camera): The group also says all major news media outlets are going to be sent encrypted copies of some of Mitt Romney's records. So far nothing in my inbox or anyone else's here.

(voice-over): The group claims packages were sent to PricewaterhouseCoopers and the Democratic and Republican Party offices in Williamson County (ph), Tennessee. Inside those packages flash drives allegedly containing copies of the Romney tax records.

PETER BURR, DEMOCRATIC PARTY CHAIR, WILLIAMSON CO., TENN.: We actually thought that it was, you know, some sort of prank and actually I almost just threw it away.

TODD: Good thing Williamson County Democratic Chair Peter Burr didn't do that. The Secret Service has that package now, has even dusted his office for prints. PricewaterhouseCoopers tells us "we are working closely with the United States Secret Service. And at this time there is no evidence that our systems have been compromised or that there was any unauthorized access to the data in question."

(on camera): Do you think this is a hoax?

MARC ZWILLINGER, FORMER JUSTICE DEPT. CYBERCRIME PROSECUTOR: I think it's difficult to tell at this point.

TODD (voice-over): Marc Zwillinger, former Justice Department cybercrime prosecutor explains what the hackers would have had to do to get into Romney's files through that office in Tennessee.

ZWILLINGER: They got credentials to get into a computer here. They connected through the network to the PWC headquarters using the authorized credentials of somebody's, you know somebody's access account, downloaded the document from the central computers or the document repository locally, saved it to a flash drive and absconded with it.

(END VIDEOTAPE)

TODD: Zwillinger says to do that the thieves would have had to collaborate with a person in that Tennessee office or trick them into giving the password for Romney's files by using some kind of phishing scheme or something like that and he says very likely only a couple of people in the entire realm of PricewaterhouseCoopers would have that password. The Secret Service would only tell us it is investigating this incident. It would not confirm that there's been an actual breach. The Romney campaign directed our questions to PricewaterhouseCoopers -- Wolf.

BLITZER: Are there other things that extortionists or these hackers would normally do to indicate to these victims that they have this information?

TODD: There are. Marc Zwillinger says when hackers actually do something like this and they want some kind of a ransom, they will try to prove it by publicizing a user name and password that only someone on the inside of that firm would know. And he points out that in this case they've given no detail like that. So there may not -- this may not be legitimate. It may be, but they've just given no detail on that so far --

BLITZER: So it could still be just a hoax?

TODD: It could be.

BLITZER: But the Secret Service is investigating --

TODD: They're checking it out.

UNIDENTIFIED MALE: Of course.

BLITZER: Thanks, Brian. Thanks very much.

Up next, the speech that made Democrats go wild.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: (INAUDIBLE) America. (INAUDIBLE)

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Looking at live pictures coming into us right now from the University of Iowa, Iowa City, Iowa. Pretty soon the president of the United States, the vice president, Dr. Jill Biden, the first lady, Michelle Obama, they will all be there at a campaign event. We're anxious to hear what they have to say on this, the day after the Democratic Convention. The day also when jobs numbers came out that were pretty disappointing. Our coverage there will go on. Stand by for that.

In the meantime, if there was a surprise in the Democratic convention, it was the fiery arm-waving speech by the former Michigan Governor Jennifer Granholm (ph). She ignited the crowd with a blistering attack on Mitt Romney, an all-out praise for President Obama who she said saved America's auto industry in its darkest hour. Watch this.

(BEGIN VIDEO CLIP)

JENNIFER GRANHOLM (D), FORMER MICHIGAN GOVERNOR: The entire auto industry and the lives of over one million hard working Americans teetered on the edge of collapse. And with it the entire manufacturing sector of this country. And we looked everywhere for help. Almost nobody had the guts to help us. Not the banks. Not the private investors and not Bain Capital.

(APPLAUSE)

GRANHOLM: But in 2009 the Calvary arrived and our new president, Barack Obama came in.

(APPLAUSE)

GRANHOLM: He organized the rescue. He made the tough calls. And he saved the American auto industry.

(CHEERING AND APPLAUSE)

GRANHOLM: Now, you know, you know, Mitt Romney, he saw the same crisis and you know what he said? Let Detroit go bankrupt. Now sure, sure, Mitt Romney loves our lakes and our trees. He loves our cars so much they even have their own elevator. But the people who design and build and sell those cars, well, in Romney's world the cars get the elevator and the workers get the shaft.

(CHEERING AND APPLAUSE)

GRANHOLM: You know what I'm saying. You know what I'm saying. Mitt Romney, he says, he says that his business experience qualifies him to be president. Sure, he's made a lot of money. Good for him. Good for him or maybe I should say good for him. But how did he make that fortune and at whose expense? You know too often he made it at the expense of middle class Americans year after year. It was profit before people.

But President Obama with the auto rescue, you know, he saved more than one million American jobs, but it wasn't just Michigan -- hey, hey, hey -- it wasn't just Michigan my friends. In Colorado, the auto rescue saved more than 9,000 jobs. In Virginia, Virginia, more than 19,000 jobs. In North Carolina, 25,000 jobs. In Wisconsin, Wisconsin, 28,000 jobs. In Pennsylvania, 34,000 jobs. In Florida, 35,000 jobs. In Ohio, 150,000 jobs, and in the great state of Michigan, 211,000 good paying American jobs all across America. Autos are back. Manufacturing is rebounding.

(CHEERING AND APPLAUSE)

GRANHOLM: Why?

(CHEERING AND APPLAUSE)

(AUDIENCE CHANTING USA)

GRANHOLM: Because when Mitt Romney did say let Detroit go bankrupt, who took the wheel? Barack Obama! When America was losing 750,000 jobs per month, who gave us a lift? Barack Obama! When American markets broke down, who jump started our engine? Barack Obama! And when America needed it most, who got us rolling again on the road to recovery?

(SHOUTING)

GRANHOLM: America, we need to rev up our engines in your car and on your ballot, the "D" is for drive forward. The "R" is for reverse. In this election, we are driving forward, not back. Let's reelect our great president, Barack Obama!

(END VIDEO CLIP)

BLITZER: Wow, what a speech that was. I was on the floor listening to her. She really as you can see electrified that crowd. Probably the rescue of the U.S. auto industry the main reason why the Romney campaign right now spending no money advertising in Michigan. I suspect they think Michigan is a lost cause for them right now.

Other news we are following, including the space shuttle and shuttle "Endeavour" it's preparing for its final journey and Los Angeles is clearing the way. That's the problem -- when we come back why the last 12 miles of the trip are causing a big controversy.

(COMMERCIAL BREAK)

BLITZER: This month the space shuttle "Endeavour" will take off from Florida's Kennedy Space Center for its last flight to Los Angeles. Soon after, it will travel the final miles on the ground to its new home and that's where the controversy begins. CNN's Casey Wian is joining us now. Casey, explain what's going on here, the problem.

CASEY WIAN, CNN CORRESPONDENT: Well Wolf, here is the problem. In front of me is one of the hundreds of trees, what's left of one of the hundreds of trees that are being cut down to clear a path for the space shuttle "Endeavour's" final trip.

(BEGIN VIDEOTAPE)

WIAN: The space shuttle "Endeavour" will begin the final leg of its final journey here at Los Angeles International Airport. It will then take a 12-mile trip along city streets to the California Science Center, but even before the trip starts, it's already causing a lot of controversy. The main reason, all of these trees you see here and hundreds of others throughout the city are being taken out to make room for the space shuttle.

Along the route, "Endeavour" will pass famous L.A. landmarks like "Randy's Donuts" (ph) and it will pass over the infamous 405 freeway. It can't go on the freeway because it is too big to fit under freeway overpasses. Its first stop will be in the city of Inglewood where more than 130 trees already have been cut down. The mayor says it is a good deal for the city.

MAYOR JAMES BUTTS, INGLEWOOD, CALIFORNIA: One of the things that you notice that Manchester Boulevard is freshly resurfaced. That happened about two-and-a-half years ago. One of the reasons that it needed to be resurfaced is because these trees' roots were invasive horizontally and they buckled the pavement. So we will get an opportunity to not only replace these trees (INAUDIBLE) five or 10 years we'll undo all this work that was done but replace them two for one with trees that are in our forestry master plan. And also, remember we get to participate in history by having the "Endeavour" come through our city.

UNIDENTIFIED MALE: I feel the trees shouldn't be cut down unless necessary and for them to cut down the trees for a space ship, it's not necessary.

WIAN: It is not just trees that are being removed. They're also having to temporarily take out stop lights and as you can see behind me they're having to raise power lines and install brand new poles. As the shuttle makes a right turn on Martin Luther King Junior Boulevard, it will enter the historic neighborhood of Lamert Park (ph). As you can see, this street is lined with scores of beautiful trees and many of the local residents here are very upset that many of them will be cut down for the shuttle. And what will the loss of some of these trees mean?

UNIDENTIFIED FEMALE: Not only does it strip us of our beauty and creating light (ph), but it will also then in terms of the health of the community, we start finding that the environmental protections are lost. Trees actually enhance the economic value of our homes.

WIAN: We are approaching "Endeavour's" final destination, the California Science Center, which is paying to move the shuttle through the streets of Los Angeles. The Science Center says it will leave a trail of improvements, including two new trees planted for every one that is cut down. And it says the ultimate benefit will be here, a tourist attraction that literally has been out of this world.

(END VIDEOTAPE)

WIAN: Now, even though the trees are being replaced two for one, one woman who lives in this neighborhood tells me this tree was over 100 years old. Obviously residents aren't going to be able to get the benefits from the new trees that this tree was providing, the shade and the beauty for decades and decades to come and that's why they remain upset -- Wolf.